New base energy news issue 933 dated 06 october 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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NewBase Energy News 06 October 2016 - Issue No. 933 Edited & Produced by: Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

Qatar to supply more natural gas to the UAE via Dolphin Pipeline The National Anthony McAuley + News Agencies

Qatar has agreed to supply more natural gas to the UAE via the Dolphin pipeline system, with the additional amount earmarked for Sharjah Electricity and Water Authority and Ras Al Khaimah.

The deal was signed in Doha yesterday by Qatar’s prime minister Sheikh Abdullah bin Nasser bin Khalifa Al Thani, and the Abu Dhabi National Oil Company chief executive and Minister of State Sultan Al Jaber.

The long-term sale and purchase agreement is between Qatar Petroleum and Dolphin Energy, although neither party was available to comment on the quantity or other terms of the deal. The Dolphin pipeline has capacity to carry 2 billion cubic feet of gas per day, or about 25 per cent of the UAE’s daily consumption.

The UAE has been a net importer of natural gas for the past six years as demand has risen sharply, with most of the imported supply coming from Qatar.

The Dolphin network takes gas from Qatar’s huge North Field via a 364-kilometre pipeline to Abu Dhabi’s Taweelah power station, then runs up to the northern emirates, including Fujairah port, and on to Oman.

The UAE has more than 215 trillion cubic feet of natural gas reserves – the world’s seventh largest – but a large portion of the amount produced is used for re-injection into oilfields to maximise crude output. The deposits are mostly very "sour", meaning they have a high concentration of hydrogen sulphide and are cumbersome and costly to produce.

Adnoc and Occidental Petroleum developed the Shah sour gasfield, the largest of its kind in the world, which came onstream early last year and is feeding in about 500 million cu ft a day, meeting about 10 per cent of last year’s domestic demand.




The UAE’s import needs have risen by more than 20 per cent over the past six years, to about 725 billion cu ft annually.

There had been plans in place for further development, but earlier this year Royal Dutch Shell pulled out of the US$10 billion project to develop the Bab sour gas field in Abu Dhabi’s western region, citing costs.

Likewise, a project led by Abu Dhabi’s strategic investment company, International Petroleum Investment Company, to build a new liquefied natural gas (LNG) intake terminal at the port of Fujairah has not progressed amid the deep decline in international LNG prices and related services caused by a worldwide glut.

Last month, Abu Dhabi opted for the cheaper option of chartering a floating storage and regasification unit (FSRU) from Texas-based Excelerate to meet domestic gas demand.

While the terms were not disclosed by the companies, the huge waves of supply from projects in Australia, Papua New Guinea, the US and elsewhere have severely depressed prices and made gas a buyer’s market. Last year, worldwide gas trade was surpassed only by oil as the most

actively traded commodity, and the surplus of supply over demand reached its highest in a decade, according to data from BP.

Although they have recovered a little since spring, Asian benchmark LNG prices are still down nearly 60 per cent in the past two years, standing at $5.4 per million British thermal unit, in August.




UAE: Adnoc to consolidate 2 key oil firms ADMA and ZADCO Reuters/Dubai

Abu Dhabi National Oil Co (Adnoc) said yesterday it planned to consolidate the operations of two of its offshore oil companies into a new entity, as part of a bigger restructuring of the Opec member’s main energy firm in the era of cheap oil.

The consolidation of Abu Dhabi Marine Operating Co (ADMA-OPCO) and Zakum Development Co (ZADCO) “aimed at capitalising on synergies to drive operational efficiency and maximise value,” ADNOC said in a statement.

“The new company resulting from this integration will be more agile, better able to respond to changing market demands, and be well positioned to take advantage of strategic opportunities for future growth.”

Current production for the ADMA-OPCO and ZADCO offshore oil fields is around 1.2mn barrels per day and Adnoc’s plan is to boost output potential to around 1.6mn bpd in 2017-18. The United Arab Emirates currently produces about 3.2mn bpd.

The consolidation comes after Adnoc reshuffled its leadership in May, the first major shake-up since the appointment of Sultan al-Jaber as chief executive earlier this year. The sharp drop in crude prices since mid-2014 has forced the oil industry to become more efficient amid tough competition.

“With Adnoc’s recent focus on driving efficiency, performance and profitability... the consolidation of ADMA-OPCO and ZADCO is a logical step,” said al-Jaber, who is also UAE Minister of State, in the statement.

A steering committee will be formed by ADNOC and its joint venture partners – BP, ExxonMobil, Japan Oil Development Company (JODCO) and Total – to oversee the integration. Yaser al-Mazrouei, current chief executive of ADMA-OPCO, will be joint chief executive of ADMA-OPCO and ZADCO. The consolidation is expected to conclude by early 2018, Adnoc said. “The existing




concession rights of our partners in the concessions currently operated by ADMA-OPCO and ZADCO will not be affected by the consolidation,” al-Jaber said. “Adnoc will continue to review and consider all options, and pursue partners for concessions expiring in 2018,” he added.

Adnoc has a 60% share in ADMA-OPCO, with the remainder owned by BP, JODCO, and Total. ADNOC has a 60% stake in ZADCO, while ExxonMobil and JODCO hold the rest. “This timely integration will serve to streamline operations, lending to greater efficiency and benefits for all stakeholders involved,” said Hiroshi Fujii, President and CEO of JODCO, which is owned by Japan’s INPEX.

Adnoc had said it plans to invest over $25bn in the next five years on boosting oil output from offshore fields as part of the UAE’s

plan to boost its oil output capacity to 3.5mn bpd by 2017-18.

ADMA-OPCO’s oil and gas production comes from two major fields, Umm Shaif and Lower Zakum. The company’s concession with its partners expires in 2018.

ZADCO was established in 1977 to develop and operate the Upper Zakum field, one of the world’s largest, with plans to boost its production capacity to 750,000 bpd by 2017-18. It also operates Umm Al Dalkh and Satah fields.




Iraq, UAE and Saudi Arabia take bigger slice of US crude market , EIA The National -Anthony McAuley

Opec was the big market share winner as US crude oil imports rose in the first half of the year and for the first time since 2010. The US government’s Energy Information Agency reported that overall imports rose by 7 per cent, or 528,000 barrels per day, through June, with Nigeria and Iraq taking the largest share of the increase.

"This increase reverses a multi-year trend of decreasing crude oil imports as a result of increasing US production," the agency said in its latest report on the industry.

Imports from Nigeria, Iraq and other members of Opec rose by 504,000 bpd, while imports from neighbouring Mexico fell by 118,000 bpd. But the higher imports have mostly displaced US domestic production, particularly from the shale oil sector, which have fallen to about 8.5 million bpd last month from a peak last summer of 9.6 million bpd.

The main factor behind the US output decline has been the collapse in oil prices, in which world benchmark North Sea Brent crude oil collapsed 74 per cent from about US$115 a barrel in late 2014 to as low as $29 a barrel earlier this year, before recovering to a current level just above $50, making a large number of shale producers unprofitable.

But the EIA also attributed the rising imports partly to changes in US law which allowed domestic producers to export oil for the first time in 40 years. "The narrowing differences between certain US crudes [prices] and international benchmarks provided an incentive for increased imports by refiners in areas where imported crudes now had a delivered cost advantage relative to domestic crudes of comparable quality," the EIA said.

The Nigerian crude mostly went to refiners on the US east coast, such as the big refining hub in New Jersey, where ExxonMobil and others have large plants. That helped reverse a trend whereby US imports of Nigerian crude had fallen to only 7,000 bpd in the first half of last year from more than 1 million bpd in 2010. They have since recovered to 186,000 bpd in the first six months of this year.

Imports from the Arabian Gulf have increased by 47 per cent over the last year, to 1.8 million bpd in July from a low last August of 1.2 million bpd, with the biggest increase from Iraq, followed by Saudi Arabia. The UAE exports most of its crude to Asia, but it increased oil exports to the US this year by about 1 million barrels through July, to 2.2 million barrels




UK Government Gives Go-Ahead for Fracking in NW England Rigzone - Jon Mainwaring|

The UK Department of Communities and Local Government rules that Cuadrilla Resources can proceed with shale gas exploration, including hydraulic fracturing, at its Preston New Road site in Lancashire.

The UK Department of Communities and Local Government said Thursday that it has upheld three appeals related to shale gas exploration at the Preston New Road and Roseacre Wood sites in Lancashire, after the local authority opted to block applications to hydraulically fracture (frack) wells at the sites in June 2015. The move means that fracking can go ahead at least at the Preston New Road site.

Cuadrilla Resources appealed the decision soon after Lancashire County Council's Development Control Committee rejected its applications to drill on the grounds that there would be too much noise and traffic. The LCC's own planning officer at the time had recommended approval of the Preston New Road exploration site application as it was acceptable "on all environmental and planning grounds".

Since then, new Prime Minister Theresa May indicated that her government would be fully behind the development of a UK shale gas industry, and has even strongly suggested that families in areas where fracking takes place should receive windfalls from the revenues generated by gas produced from fracking.

On Thursday, the Department of Communities and Local Government said in an official statement that it will allow three of Cuadrilla's appeals and will grant planning permission for drilling and monitoring work at Preston New Road, as well as the construction of two seismic monitoring arrays at the Roseacre Wood exploration site. However, it has rejected Cuadrilla's appeal to be allowed to drill site at Roseacre Wood.

At Preston New Road, Cuadrilla will be allowed to drill up to four exploratory wells and frack those wells.

In its statement about the appeals, the government said that the Secretary of State for Communities and Local Government "agrees that the need for shale gas exploration is a material consideration of great weight in these appeals, but that there is no such Government support for shale gas development that would be unsafe and unsustainable", and that the need for shale gas exploration "could help achieve secure energy supplies".




Onshore oil and gas trade association UKOOG issued a statement in which chief executive Ken Cronin said:

"The approval of the application at Preston New Road is an important step forward towards determining what gas resources we have under our feet, with the aim of developing a sustainable onshore natural gas exploration industry in the UK.

We need the gas to heat our homes, produce electricity, supply our industries and to reduce our dependency on imports. The onshore oil and

gas industry is committed to producing this gas in the safest and most environmentally sensitive way possible and to creating jobs and opportunities in the supply chain.

"With respect to Roseacre Wood, the decision document highlights local transport issues which will require further consultation. All other issues as in Preston New Road have been addressed."

In another statement on the government's announcement, Michael Burns, energy partner at law firm Ashurst, said:

"This is a key decision not just for the UK shale gas industry but potentially for broader UK security of energy supply. In a post-Brexit world, the shale gas industry could also have a significant role in job creation which would be very welcome."

The British Geological Survey estimates that there could be some 2,281 trillion cubic feet of shale gas contained within the Bowland Basin in northwest England, where Preston New Road and Roseacre Wood are located.




Tanzania, Congo Sign Deal for Joint Oil Exploration in Tanganyika Reuters|Fumbuka

Tanzania and the Democratic Republic of the Congo signed a memorandum of understanding on Tuesday for joint exploration and development of hydrocarbons in Lake Tanganyika. The lake, which straddles the border between Tanzania, Democratic Republic of Congo, Burundi and Zambia, is the world's second largest by volume and second deepest, according to officials.

"We have signed a memorandum of understanding to exchange experiences in exploration and exploitation of petroleum in Lake Tanganyika," Congolese President Joseph Kabila told a news conference in Dar es Salaam after talks with Tanzanian President John Magufuli. "We believe that there is petroleum in Lake

Tanganyika." Kabila, who arrived in Tanzania late on Monday for a three-day state visit, said the two countries had agreed to pursue joint oil and gas exploration activities in the lake. "We have also discussed mutual cooperation in the proposed crude oil pipeline project to be constructed from Uganda to Tanzania. Uganda is expected to start producing oil soon and Congo will also in the next few years begin its own oil production," Kabila said. Land-locked Uganda announced in April it would build a pipeline for its oil through Tanzania rather than Kenya, which had wanted to secure the export route. Kabila said Congo wanted to use the same pipeline to export its future oil production from Lake Albert. France's Total, one of the oil firms developing Uganda's fields, is taking part in the construction of the crude oil pipeline along with Britain's Tullow Oil and China's CNOOC. Tanzanian officials said they expected construction of the pipeline to be completed in 2020 at an estimated cost of $3.5 billion. Tanzania in 2011 awarded oil and gas exploration rights for the northern side of Lake Tanganyika to a subsidiary of Total. Interest in East Africa as a new hydrocarbon region has been heating up in recent years after major discoveries of oil in Uganda and natural gas in Tanzania and Mozambique. Tanzania announced in February it had discovered an additional 2.17 trillion cubic feet (tcf) of possible natural gas deposits in an onshore field, raising its total estimated recoverable natural gas reserves to more than 57 tcf. East Africa's second-biggest economy is yet to make commercial discoveries of oil.




Tanzania Plans to Commission Natural Gas Plant by 2025 Bloomberg - Joseph Burite JosephBurite

Tanzania, which has at least 57 trillion cubic feet of natural gas reserves, plans to commission a plant by 2025 to process as much as 11.1 trillion cubic feet.

The Ministry of Energy’s plan estimates that the East African nation can recover as much as 70 percent of the resource. It also projects total demand at 32.5 trillion cubic feet over three decades, with 8.8 trillion cubic feet going to power generation, according to a document handed to reporters in the commercial capital, Dar es Salaam.

Tanzania utilizes about 33 billion cubic feet each year to generate 711 megawatts of electricity, according to the document. The nation plans to export at least 3.1 trillion cubic feet of natural gas to East and Southern Africa in the 30 years through 2045 as global prices drop. “Declining global prices mean regional markets maybe be a better option to monetize the resource,” according to the plan.

Global production of natural gas is forecast to grow 7.6 percent each year to reach 500 million tons per year in 2030, according to the International Gas Union.“Tanzania should not necessarily start allocating gas ratios as that might encourage the growth of unsustainable industries,” Paul Hogarth, an upstream commercial team leader at London-based BG Group said at a conference in Dar es Salaam Wednesday.




US: propane exports drove U.S. petroleum product export growth in first half of 2016 Source: U.S. Energy Information Administration, Petroleum Supply Monthly

In the first half of 2016, the United States exported 4.7 million barrels per day (b/d) of petroleum products, an increase of 500,000 b/d over the first half of 2015 and almost 10 times the crude oil export volume. While U.S. exports of distillate and gasoline increased by 50,000 b/d and nearly 140,000 b/d, respectively, propane exports increased by more than 230,000 b/d. Propane surpassed motor gasoline to become the second-largest U.S. petroleum product export, after distillate.

Although total U.S. petroleum product exports grew, export destinations remained largely unchanged. Mexico, Canada, and the Netherlands received the greatest volumes of U.S. petroleum products in the first half of 2016, importing 775,000 b/d, 579,000 b/d, and 271,000 b/d, respectively. U.S. petroleum products tend to stay in the Western Hemisphere. In 2015, approximately 60% of total petroleum product exports remained within the Western Hemisphere, down slightly from 65% in 2005.

Distillate exports averaged 1.2 million b/d in the first half of 2016, an increase of 50,000 b/d from the same period of 2015. Central and South America accounted for the largest share of U.S. distillate exports, averaging more than 620,000 b/d in the first half of 2016, up more than 30,000 b/d from the same period of 2015. The largest single destination overall for U.S. distillate exports was Mexico, which averaged 147,000 b/d in the first half of 2016.

U.S. propane exports increased from 562,000 b/d in the first half of 2015 to 793,000 b/d in the same period of 2016. Exports to Asia and Oceania accounted for 94% of this growth. Japan imported the most U.S. propane at 159,000 b/d in the first half of 2016, an increase of 111,000 b/d from 48,000 b/d in the same period of 2015. U.S. exports of propane to Panama, however, fell from 41,000 b/d in the first half of 2015 to 7,000 b/d in the first half of 2016.

The large increases in propane exports to Japan and decreases in propane exports to Panama could be a result of reduced ship-to-ship transfer activity. Some of the propane exports from the




United States that undergo ship-to-ship transfers will cite the location of the transfer and not the final destination of the propane. This often results in larger-than-actual export numbers for the countries where the ship-to-ship transfers take place and in less-than-actual numbers for some final destinations.

Gasoline exports increased 138,000 b/d in the first half of 2016 compared with the first half of 2015. North America (Canada and Mexico) accounted for most of the growth, with an increase of 92,000 b/d.

Similar to U.S. distillate fuel exports, Mexico represented the largest single recipient of U.S. gasoline exports at 363,000 b/d in the first half of 2016, up from 283,000 b/d in the first half of 2015.

As part of the energy reforms passed in 2013, Mexico liberalized its energy sector, allowing market participants other than the state company Petroléos Mexicanos (Pemex). In January 2016, as part of the liberalization process, Mexico began to allow companies besides Pemex to import fuels, resulting in increased exports from nearby refineries along the U.S. Gulf Coast. Canada was the second-largest recipient of U.S. gasoline at 66,000 b/d in the first half of 2016, up from 55,000 b/d in the first half of 2015.




NewBase 06 October 2016 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil prices ease from June highs on weaker physical market Reuters - By Henning Gloystein

Oil futures dipped on Thursday after Saudi Arabia trimmed the price of its flagship physical crude to Asia, but were still near more than three-month highs following a drop in U.S. crude inventories.

U.S. West Texas Intermediate (WTI) crude futures were trading at $49.60 per barrel at 0677 GMT, down 23 cents, or 0.46 percent, from their last settlement. Brent futures were down 20 cents, or 0.39 percent, at $51.66 per barrel.

Both contracts hit June highs on Wednesday after U.S. data showed that crude stockpiles fell 3 million barrels last week to 499.74 million barrels. Despite this, stocks were still close to all-time highs.

Traders said Thursday's fall reflected weaker physical crude after top exporter Saudi Arabia cut the price of its crudes to Asia for November in a sign that the global fuel glut persists.

Another potential cap on prices comes from the United States. Jeffrey Halley, senior market analyst at brokerage OANDA, said that at $50 a barrel for WTI, U.S. shale drillers, who have spent much of the year cutting back production amid low prices, may start bringing back rigs.

Overall, however, analysts said that the market was well supported at current levels, especially because of a planned output cut by the Organization of the Petroleum Exporting Countries (OPEC).

Oil price special

coverage




"We expect that Saudi will shoulder the bulk of the production cuts with a reduction of 5 percent or 0.5 million barrels per day (bpd), with other Gulf States cutting by 0.3 million bpd. With Iran, Libya and Nigeria getting a 'pass', remaining cuts will be on the shoulders of some of the less reliable members in OPEC," Bernstein Energy said in a note on Thursday.

However, Bernstein added that there was still some "skepticism that an agreement will hold ... (as) the track record of OPEC over the past 30 years has not been good." Analysts said that there were also risks of forced supply disruptions.

"Oil prices seem headed for higher levels in the coming period," Global Risk Management said in a report this week, pointing to the risk of "several oil producing countries struggling to increase or even keep production at current levels due to unrest/oil facility wreckages and lack of industry investments."

Barring such disruptions, analysts did not expect prices to shoot up much further as production remains high even with an OPEC cut. "Resilient production in the U.S. and Russia will postpone crude market rebalancing and keep the market in surplus into 2017," BMI Research said.

"With an insufficient demand response to counteract strong supply, the result is a downward revision of our 2017 Brent forecast to $55 per barrel from $57 per .

OPEC, non-OPEC producers plan informal meet in Istanbul to discuss Algiers deal

OPEC and non-OPEC oil producers plan an informal meeting in Istanbul Oct. 8-13 to discuss how to implement a production deal OPEC members reached in Algiers last month, Algerian Energy Minister Nouredine Bouterfa has told local Ennahar TV.

In an interview scheduled be broadcast on Thursday, Bouterfa said the Algiers deal to cut output would be in force for up to a year.

Oil prices rose about 7 percent in September, ending up a second straight month, after OPEC unveiled

plans in Algiers to reduce output to between 32.5 million and 33.0 million barrels per day. Details are still being worked out among producers.

Wall of Supply’ to Block Oil Rally at $55, Goldman Sachs Says Oil’s rally will stall at $55 a barrel as U.S. shale drillers get back to work and a “wall of supply” from investments made over the past decade hits the market, Goldman Sachs Group Inc. said.

Global oil markets are set to remain “very oversupplied” in 2017 amid the return of disrupted output in Nigeria and Libya, resilient U.S. shale production and the start of major projects commissioned over the past 10 years, Goldman’s head of commodities research Jeff Currie said

in a Bloomberg televisioninterview.

“We’re still seeing a lot of oil enter this market,” Currie said in an interview with Tom Keene and Francine Lacqua. “It’s hard for this market to go above $55.”

U.S. oil futures climbed to a three-month high in New York on Wednesday, trading at $49.54 a barrel at 7:09 a.m. local time.




“The sweet spot is 2017” for supplies coming from new projects reaching world markets, Currie said. The outlook for an oversupplied market next year drove OPEC’s announcement in Algiers last week that it will cap production at 32.5 million to 33 million barrels a day, he added.

Shale producers are hedging their output as soon as prices climb to a range of $50 to $55 a barrel, allowing them to continue drilling, Currie said. The number of rigs targeting crude in the U.S. has risen for a fifth week to the highest since February, Baker Hughes Inc. said Sept. 30.

While investment in new oil supply has been cut, any shortage in the market is “years off,” Currie said. A “bull state,” where output shortfalls push prices above $100 a barrel, couldn’t happen before 2019 or 2020, he said. Oil futures haven’t traded above $100 since 2014.

Oil Tankers Piling Up in North Sea Show Glut Facing OPEC A pile up of tankers waiting in the North Sea suggests a glut is building again in the market where benchmark crude

is traded, highlighting the task facing OPEC as it seeks to rein in a global glut.

At least 10 tankers are at or near two locations off the U.K. coast where they must wait to transfer their cargoes, according to vessel-tracking information compiled by Bloomberg. It is rare for more than one or two tankers to remain at the sites -- England’s Southwold and Scotland’s Scapa Flow -- for multiple days, historical data show. The current increase is also happening amid seasonal work at the U.K.’s largest oil field.

"The physical crude market is already showing signs of weakness with floating storage threatening to build up in the North Sea, in spite of ongoing field maintenance," according to a research note from JBC Energy GmbH. It cited the vessel pile up at the ship-to-ship transfer sites as one of the indicators of a surplus.

The Organization of Petroleum Exporting Countries is trying to prop up oil prices despite signs that a worldwide supply surplus isn’t getting any better. The group is now ironing out the details of a pact, announced last week in Algiers, that would curb output to 32.5 million to 33 million barrels a day.

The pact triggered a rally in crude prices, which in turn spurred arush by U.S. shale producers to lock in future prices.

Libya, Nigeria Rebound

The OPEC accord exempts Iran, which is emerging from international sanctions, from production cuts. While precise details of the plan have yet to be thrashed out, Nigeria has also said it won’t have to comply and Libya is unlikely to be asked to because its oil production is a fraction of what it should be. The deal will be finalized at the end of next month.

European refiners "have more options again now that Nigerian and Libyan loadings are rebounding" and crude and petroleum-product stocks remain high, JBC Energy analyst Eugene Lindell said in an e-mail.

There are signs that oil futures respond to the day-to-day changes in the physical oil market. Brent contracts slumped more than 10 percent from mid-July to early August after it emerged that traders had amassed a fleet of tankers that were storing barrels in the North Sea. By mid August, many of those tankers had gone, and futures more than reversed their decline.

Daily exports of the crude grades that comprise the Dated Brent benchmark are set to rise to a seven-month high in November, according to loading programs obtained by Bloomberg.




NewBase Special Coverage

News Agencies News Release 03 October 2016

Iran Social life and econoy Expose Iran's Divide Before Election Bloomberg - Marc Champion

Valiasr Street, the 12-mile boulevard that Shah Reza Pahlavi built in the 1930s to link his summer palaces in the north of Tehran to a new train station in the south, connects two increasingly polarized Iranian worlds.

At the top, where the city climbs into the foothills of the Alborz mountains, the wealthy try to escape Tehran’s dense pollution. Their marbled apartments can go for $10 million, stores sell Rolexes and Maseratis. Chicly dressed women have their compulsory headscarves casually slung.

By the time you reach the flat, smog-afflicted districts near the station, the severe black chador robe is more prevalent. Luxury imports are out of reach. At a tiny shoe store there, $22 a-pair leather shoes gather dust. "People just buy sandals nowadays," said shopkeeper Hossein Falahat, gesturing at the boxes of $1.50 flip-flops on the floor.

As in western capitals, Tehran’s “one percent” divisions are on clear display and roiling politics before May’s presidential election. Iran may have already had its Donald Trump in the shape of former leader Mahmoud Ahmadinejad, but disappointment at the slow pace of change has given the country’s chastened conservatives a weapon with which to attack successor Hassan Rouhani as the man who sold out to the west.

Since coming to power in 2013, Rouhani reversed most of the populist economic and foreign policies that had left the country isolated, its economy in recession and inflation rampant. While those changes culminated with the nuclear deal that ended international sanctions in January, residual U.S. restrictions have blocked the awaited flood of investment.




Opponents call the government extravagantly paid elitists, uninterested in either protecting the poor or building the "Resistance Economy" mandated by Supreme Leader Ayatollah Ali Khamenei to thwart the sanctions. Rouhani’s allegedly pro-Western, neo-liberal economic policies, favor Iran’s wealthy, these critics claim.

Tensions between rich and poor go back to the 1979 revolution that brought Ayatollah Ruhollah Khomeini to power, according to Djavad Salehi-Isfahani, an Iranian-born professor of economics at Virginia Tech University in the U.S.

"When people see Maseratis driving around Tehran, it tells them something: It is again a symbol of the poor, the revolutionary children of Khomeini, not having control," said Salehi-Isfahani. "Deep down there is this class issue that Khomeini understood and Khamenei also understands, and which they have tried to exploit."

On the face of it, Iran appears to be doing modestly well since the nuclear deal with major world powers last year took effect in January. Sanctions had halved oil exports, collapsed the currency and pushed inflation above 40 percent. Oil production is now edging toward the pre-sanctions level of about 4 million barrels a day.

The Saudis and OPEC just agreed an output cut that could boost the price of oil while still allowing Iran to expand production. Every dollar on a barrel of crude adds about $1 billion to the Iranian economy, said Homayoun Falakshahi, oil and gas analyst for the Middle East and North Africa at Wood Mackenzie. The International Monetary Fund forecasts the Iranian economy will grow more than 4 percent this year.

Rouhani, 67, would appear unassailable at the richer north end of Valiasr, the heartland of support for his effort to reintegrate the Islamic Republic into the global economy.

The complaints most often heard here are that Rouhani and his government aren’t reformist, internationalist or pro-free market enough and too much a part of the system. Yet there’s also




widespread belief his opponents are deliberately undermining efforts to draw foreign investment in an attempt to damage him politically.

"Things are getting better," said petrochemical engineer Mahdi Jahangar, 35, shopping for vegetables at northern Tehran’s Tajrish market, a middle-class alternative to the chaotic Grand Bazaar downtown. "But then Iran fires off a missile and it changes everything,” he said, referring to weapons tests Iran has conducted since the nuclear deal was signed.

Priced Out

Back at the southern end of Valiasr, near the shoe store Falahat took over from his father after retiring as a nuclear engineer, other shopkeepers selling goods from motorcycles to real estate to cards told a less optimistic story: The poor are getting priced out by the lingering effects of a devalued currency and inflation.

"People aren’t getting married," lamented Mohammad Hassemi, who has been selling wedding invitations for 30 years.

Traffic moves along Theran's Valiasr Street.

For residents here, the lifting of sanctions in January has yet to produce the prosperity and jobs Rouhani promised. That’s widely blamed on the U.S., which has kept in place non nuclear-related sanctions that continue to dissuade large international banks from doing business in Iran. But it has also opened Rouhani to attack. "People are not patient," said Falahat.

In July, opponents pounced on leaked salary data showing that some government employees were earning as much as $220,000 a year. The sums hardly stood out by western standards, or the revelations of spectacular corruption under Ahmadinejad. But in a country where officials go for inexpensive suits and five o’clock stubble to show their populist credentials, the revelations stung. The government announced salary caps.

"One percent of the Iranian population owns 70 percent of the wealth," claimed Said Zahedi, 53, a former civil servant in a café on Valiasr, citing a newspaper article he had just read. "The mottos and slogans of the revolution were partly about changing this system, but it failed."

A poll published in July found 74 percent of respondents said their living conditions hadn’t improved. In the survey by Toronto-based IranPoll.com for the University of Maryland’s Center for International and Security Studies, 38 percent held a “very favorable” view of the president versus 61 percent when the nuclear deal was signed.




Mohammad Hassan Abyaneh, a former Iranian ambassador to Australia, Italy and Mexico, is among conservatives trying to persuade Iranians that Rouhani is failing. The reason, he says, is that the nuclear agreement he signed was based on a naïve assumption the West would stick to its side of the bargain.

Abyaneh said the U.S. was never going to allow an end to sanctions because that would undermine its enduring strategic goal: To keep Iran weak and overly dependent on oil. Rather than promote investment in a diversified Iranian economy, the U.S. wants Iran to spend its oil revenue on the kind of imported goods seen in at the northern end of Valiasr, he said.

"That’s one of the complaints the Iranian nation has against the government: Why did you let yourselves be fooled by them?" said Abyaneh. Sanctions at least forced Iran to rely on its own resources, he said.

The conservatives are disunited and it’s still unclear who Rouhani’s main challenger might be. Ahmadinejad, a self-styled champion of the poor, recently floated the idea of running again, only to be slapped down by Khamenei. The ayatollah said his participation would “polarize” the country.

Unknown Quantity

Another unknown is the shift in U.S. foreign policy should Trump prevail next month and tear up the playbook when it comes to Iran. The risk for Rouhani is that even if he wins reelection, he emerges weakened.

Supporters of Rouhani’s policies say the Supreme Leader’s "Resistance Economy" doesn’t mean cutting off the country. "It means: How can we keep our economy alive in the face of domestic and foreign shocks?" Mansour Moazami, deputy minister for industry, mining and trade, said at his office towards the top of Valiasr. Yet Iran’s doors are being closed from the outside.

The big western banks capable of financing investment were fined billions of dollars by the U.S. Treasury Department for doing business with Iran in the past and, so far, none has been unwilling to take the risk again.

"This is frustrating and it’s creating a problem for the administration," said Mostafa Behesti Rouy, a board member at Bank Pasargad, one of Iran’s largest banks, said at his office on Valiasr. "People say, ‘you haven’t delivered what you promised’ -- and the government’s opponents are using that."




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990

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Khaled Al Awadi is a UAE National with a total of 26 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels. NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 22 September 2016 K. Al Awadi




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New base energy news issue 933 dated 06 october 2016